International Competition for R&D Investment
AbstractTwo jurisdictions compete to attract shares of the R&D investment budget of a large multinational enterprise, whose investments potentially confer positive spillovers on national firms. The firm has private information both about its efficiency and about spillovers. It is shown that strategic tax competition may lead to overinvestments relative to the first-best allocation, that the excessive investments occur in the country where the positive spillover effects are lowest, and that they are most severe for the least efficient firms. This occurs for sufficently asymmetric spillovers, and implies that investments under competition are then excessively spread out and not properly concentrated to the country where spillovers would be largest.
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Bibliographic InfoPaper provided by Department of Economics, University of Bergen in its series Norway; Department of Economics, University of Bergen with number 1500.
Length: 31 pages
Date of creation: 2000
Date of revision:
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Postal: Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway
Web page: http://www.uib.no/econ/
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RESEARCH AND DEVELOPMENT ; INVESTMENTS ; COMPETITION;
Find related papers by JEL classification:
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
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